Concerns about the harmful effects of pesticides on the environment, human health, and wildlife have led to research and promotion of integrated pest management (IPM) strategies. Recently, an IPM program was introduced in the Albanian olive sector through the USAID-funded global IPM-CRSP project to develop improved olive IPM technologies. This study develops and applies a protocol for integrated economic impact assessment of olive pest management strategies designed by the IPM-CRSP project in Albania. The main components of the integrated approach for economic impact assessment of olive IPM include (i) net return analysis for measuring farm level impacts; (ii) economic surplus modeling for measuring market-level impacts; and (iii) modeling of IPM adoption under output uncertainty. The economic surplus equilibrium displacement model developed for the Albanian olive market with no international trade accounts for IPM research-induced supply shifts, increased demand due to quality improvement, and research-induced spillovers to non-target zones.

The main sources of data for performing partial budgeting and economic surplus analysis were: (i) an expert survey; (ii) partial budgets compiled based on a farmer survey and expenditure records from field-level experiments; and (iii) data collected at the market level. The data used to estimate the dichotomous logit model came from a 1999 survey of 200 growers and a survey of 120 growers carried out in 2000 in the Vlora district of Albania.

The net return analysis indicates that compared to conventional practices, the proposed olive IPM packages generally promise higher yields, improved quality of olive products, lower pesticide use, and higher net returns to producers. However, adoption of some of the IPM practices implied higher production costs. Based on the simulation results, the Albanian olive industry has the potential to derive a net IPM research benefit between $39 million (assuming that farmers move directly from minimum spraying to IPM) and $52 million (assuming that farmers move from full pesticide program to IPM) over the next 30 years. Farmers' reliance on pesticide use on olives and other crops does not seem to hinder IPM adoption. Grower perceptions and the process of expectation formation significantly influence adoption decisions. Addressing the process of expectation formation and changing these perceptions by educational programs and better access to information will encourage IPM adoption.